TMI Blog2022 (4) TMI 630X X X X Extracts X X X X X X X X Extracts X X X X ..... measure undertaken by the panchayats and municipalities for the social development of the gills belonging to the backward classes/Scheduled Tribes, including the residential accommodation of the girls or women, will definitely come under the ambit of the responsibilities/functions entrusted to panchayats and municipalities. It can be safely interpreted that entry at SI. No. 3 of the Exemption Notification No. 12/2017/C.T. (Rate) dated 28.06.2017 has a very wide connotation and coverage. Since, it has been established that the activities related to residential accommodation of the girls or women, belonging to the Backward Class/Scheduled Tribes, will definitely come under the ambit of the responsibilities/functions entrusted to panchayats and municipalities, therefore, it can be safely concluded that in the instant case, pure services, i.e., renting out of immovable properties, provided by the Appellant to the State Government, will definitely be construed as an activity in relation to the function entrusted to a Panchayat under article 243G of the Constitution, or in relation to the function entrusted to a Municipality under article 243W of the Constitution, and thereby, are ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2019-20/B-84 dated 02.11.2021, pronounced by the Maharashtra Authority for Advance Ruling (hereinafter referred to as MAAR ). BRIEF FACTS OF THE CASE 3.1 The Appellant is unregistered, and is engaged in providing the services of renting out of immovable property, situated at Nashik, and is in the receipt of rental income. 3.2 The Appellant is one of the co-owners of the immovable property, which are jointly owned by five individuals. All the five co-owners, including the Appellant, hold proportionate share in the property vide three separate agreements. The property is let out to Social Welfare Department ( Samaj Kalyan Vibhag ), Nashik Division of Maharashtra Government. 3.3 The service is being provided from 03.06.2019 for 36 months, and the Appellant is receiving fix rent of ₹ 1,62,073/-. The details of the properties and the co-owners along with their rental income is tabulated hereinunder: SI.No. Particulars Agreement 1 Agreement 2 Agreement 3 1 Property name and address Plot no. 4, 5 6. S.No. 279 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he MAAR under Section 97 of the CGST Act and MGST Act. seeking advance ruling on the following questions:- a) Whether the services provided to Special Assistance Department, Government of Maharashtra (Social Welfare Department) for residential accommodation of underprivileged girls is exempt from GST? b) Whether TDS provisions will be applicable in case where the supply of services is exempt? c) As the Appellant is not registered under the GST and provide services to Special Assistance Department, a Department of State Government, then whether TDS notification issued under section 51 would be applicable for deduction of TDS? d) In case TDS is deducted, whether they would be entitled for refund of the same? The MAAR, vide its Advance Ruling Order No. GST-ARA-94/2019-20/B-84 dated 02.11.2021, has held that the services provided by the Appellant to Social Welfare Department is not exempt from GST and TDS provisions will be applicable in this case. In respect of Question no. (d), it has been held by MAAR that question pertained to entitlement of refund which is not covered under the Advance Ruling Provisions contained under section 97 of the CGST Act, 2017, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nregistered person as stated under section 51 of the CGST Act. hence TDS on the same may not be deducted. 5.5 Rent received from the Social Justice and Special Assistance Department is exempt from tax in view of Notfn. No. 12/2017-C.T.(R) 5.6 The Appellant has let out his property to Social Justice and-Special Assistance Department, Government of Maharashtra, who is using the same property for providing residential accommodation to under-privileged girls belonging to Scheduled Tribes. 5.7 In this regard, relevant portion of the said Notification No. 12/2017- Central Tax (Rate) is being reproduced hereinunder: SI. No. Chapter, Service Code (Tariff) Description of Services Rate (per cent.) Condition (1) (2) (3) (4) (5) 3. Chapter 99 Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e them to function as institutions of self-government and such law may contain provisions for the devolution of powers-and responsibilities upon Panchayats at the appropriate level, subject to such conditions as may be specified therein, with respect to: a) the preparation of plans for economic development and social justice; b) the implementation of schemes for economic development and social justice as may be entrusted to them including those in relation to the matters listed in the Eleventh Schedule. In this regard, the Eleventh Schedule of the Indian Constitution covers lol lowing, which could.be relevant for discussion:- ELEVENTH SCHEDULE (Article 243G) 1.... ..... 25. Women and Child development 26. Social welfare, including welfare of handicapped and mentally retarded. 27. Welfare of weaker sections,-and of scheduled castes and the scheduled tribes. 28 ........................ 5.12 Further, Article 243W of the Indian Constitution provides as below:- 243W. Powers, authority and responsibilities of Municipalities, etc.- Subject to the provisions of this Constitution, the Legislature of a State may, by law, endo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vides should be 'pure service' (excluding works contract service or other composite supplies involving supply of any goods) Yes [as the services does not involve supply of any goods] (b) Service should be provided, inter-alia, to Government Authority Yes [as the services are provided to Social Justice and Special Assistance Department, Government of Maharashtra] (c) Services should be by way of any activity in relation to any function entrusted to a Municipality under article 243W of the Constitution Yes [as the services provided are covered under Twelfth Schedule of Constitution (Article 243 W)] 5.16 As all the three conditions are satisfied in the instant case, by considering the aforesaid notification, it is exempt under CGST Act,2017. For the same reason, it is exempt under MGST Act. 2017. 5.17 Gross Turnover of each Co-owners does not exceed threshold, and thus, is exempt from registration u/s 22( 1) of the CGST Act, 2017. 5.18 The Appellant is one of the co-owners of immovable property, jointly owned by five ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellant is of the view that there is no requirement to take registration under sec.22( 1) of the GST Act, 2017. THE JURISDICTIONAL OFFICER'S SUBMISSIONS 6. The jurisdictional officer in the matter has submitted that since it is not clear whether the activities of the Social Welfare Department of Maharashtra Government will be covered under Article 243G or 243W of the Constitution, the provisions of the exemption Notification No. 12/2017-C.T. (Rate) dated 28.06.2017 will not be, applicable in the present case. It is further submitted that since the value of supply made by the Appellant to the Social Welfare Department, as per the Agreement, exceeds Rupees Two Lakh and Fifty Thousand, therefore, the recipient, i.e., the Social Welfare Department of the Maharashtra Govt., is eligible to deduct TDS in accordance with provisions of Section 51 of the CGST Act, 2017. PERSONAL HEARING 7.1 Personal hearing in the matter was held on 04.03.2022 in the virtual mode, which was attended by Shri Pritam Mahure, C.A., on behalf of the Appellant. Shri Mahure reiterated the earlier submissions made while filing the Appeal under consideration. 7.2 Shri Mahure, in the af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has been held that the services provided by the Appellant to Social Welfare Department is not exempt from GST and TDS provisions under Section 5 1 of the CGST Act, 2017, will be applicable in this case. 9. On perusal of the facts and the Order passed by the MAAR, the moot issue before us is as to whether the subject activity of renting out of immovable properties to the Social Welfare Department of Maharashtra Govt, for residential accommodation of girls from the backward class/Scheduled Tribes would amount to be in relation to any function entrusted upon the panchayat under Article 243G of the Constitution or any function entrusted upon the municipality under Article 243 W of the Constitution. To determine this moot issue, first we would like to examine the Article 243G of the Constitution, which is being reproduced hereinunder:- 243G. Powers, authority and responsibilities of Panchayats. Subject to the provisions of this Constitution, the Legislature of a State may, by law, endow the Panchayats with such powers and authority as may be necessary to enable them to function as institutions of self-government and such law may contain provisions for the devolution of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that panchayats and municipalities have been entrusted with the responsibilities of planning and implementation of the various schemes for ensuring social justice and development of the weaker section of the society, which clearly includes the girls and women from the backward class/Scheduled Tribes. Thus, any welfare measure undertaken by the panchayats and municipalities for the social development of the gills belonging to the backward classes/Scheduled Tribes, including the residential accommodation of the girls or women, will definitely come under the ambit of the responsibilities/functions entrusted to panchayats and municipalities. Having observed this, now we would like to dissect the relevant entry at SI. No. 3 of the Exemption Notification No. 12/2017/C.T. (Rate) dated 28.06.2017, which reads as under: SI.No. Chapter, Service Code (Tariff) Description of Services Rate (per cent.) Condition (1) (2) (3) (4) (5) 3. Chapter 99 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d classes. This is in relation to the function entrusted to a panchayat under article 243G of the Constitution which is covered by 27th Entry of 11th schedule which says Welfare of weaker sections, and in particular, of scheduled castes and the scheduled tribes. 13. Further, we do not find any deficiency in the submissions made by the Appellant, as ruled by the MAAR, because the Appellant has submitted a copy of the Agreement entered with the Assistant Commissioner of Social Welfare Department, Maharashtra Government, which manifests the nature of services provided by the Appellant as well as nature of the recipient of services, which, in the present case, is State Government. 14. Once, it has been concluded that the impugned activity undertaken by the Appellant is eligible for exemption from GST, there is no point discussing the aggregate turnover of the Appellant which include the rental income received from Social Welfare Department, Govt, of Maharashtra as the issue before us was to determine whether the services provided to the Social Welfare Department, Government of Maharashtra for residential accommodation of underprivileged girls is exempt from GST and not the li ..... X X X X Extracts X X X X X X X X Extracts X X X X
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